In the third quarter Moscow Exchange posted record fee and commission income. Our efforts to develop the exchange infrastructure, simplify market access and diversify the product offering and client base have resulted in trading volume growth across a number of key instruments – equities, bonds, repos, FX swaps and commodity derivatives – while also growing income from depository and clearing services.

Russian companies are increasingly using the public markets to fund their businesses, which is visible in the significant growth of new bond issues this year. In the second half of the year we are also seeing increased activity in the primary equity market. A new and important trend is mid-sized companies coming to the Exchange to raise capital: in recent weeks there have been two successful IPOs, one of which took place on our new SME sector.

We have built out an effective risk management system: the recent volatility on financial markets has not impacted the reliability of the central counterparty.

And finally, we see international investors ramping up activity on our markets, we are working on increasing liquidity on the Money and FX Markets by adding new market participants – notably Russian corporates – and we continue to actively work to attract retail investors.

Maxim Lapin, Chief Financial Officer of Moscow Exchange, added:

In the third quarter we achieved significant growth in fee and commission income thanks to successful implementation of our strategic initiatives as well as improving market conditions. We saw increases of fee income from the Money Market (+30.8% YoY), Fixed Income Market (+36.2% YoY), Equities Market (+19.8% YoY), Derivatives Market (+4.6% YoY) and Depository and Settlement Services (+21.1% YoY). The decline in net interest income was primarily attributable to lower interest rates on RUB balances. We continued to keep operating expenses under control as they grew 10.9% YoY, below our full-year guidance. Almost 50% of the increase was attributable to growth in D&A and equipment maintenance expenses, a result of last year’s CAPEX program. This helped us to deliver an EBITDA margin of 73.5%, attesting to the company’s high operational efficiency.

FINANCIAL HIGHLIGHTS

RUB mln

Q3 2017

Q3 2016

YoY

Q2 2017

QoQ

Operating Income

9,657.2

10,784.4

-10.5%

9,820.7

-1.7%

Fee and commission income

5,458.5

4,749.4

14.9%

5,076.9

7.5%

Net interest and other finance income

4,185.1

6,028.9

-30.6%

4,735.9

-11.6%

Other operating income

13.6

6.1

123.0%

7.9

72.2%

Operating Expenses

3,306.2

2,980.4

10.9%

3,214.1

2.9%

Operating Profit

6,351.0

7,804.0

-18.6%

6,606.6

-3.9%

Net Profit

5,143.1

6,289.8

-18.2%

5,299.5

-3.0%

Basic earnings per share. RUB

2.29

2.80

-18.2%

2.35

-2.6%

EBITDA

7,096.1

8,399.2

-15.5%

7,331.9

-3.2%

EBITDA margin

73.5%

77.9%

-4.4 p.p.

74.7%

-1.2 p.p.

ANALYSIS OF Q3 2017 FINANCIALS

Total operating income. Operating income in Q3 2017 was RUB 9.66 bln, down 10.5% YoY. Fee and commission income was up 14.9% YoY and reached RUB 5.46 bln, MOEX’s highest quarterly fee income to date. The share of fee and commission income in operating income rose to 57% (44% in Q3 2016). Net interest and other finance income, excluding a net gain on financial assets available for sale, decreased 18.1% YoY because of a decline in prevailing RUB interest rates. In 3Q 2017, the company recorded a net gain of RUB 16.0 mln on financial assets available for sale.